Ask Question
19 June, 05:12

National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities:

Assets Liabilities

Cash $20 Deposits $980

Treasury bills 40 Subordinated debentures 40

Residential mortgages 600 Common stock 40

Business loans (BB rated) 430 Retained earnings 30

Total assets $1,090 Total liabilities and equity $1,090

a. What is the leverage ratio?

b. What is the CET 1 risk-based ratio? c. What is the Tier 1 risk-based capital ratio? d. What is the total risk-based capital ratio?

e. In what capital risk category would National Bank be placed?

+5
Answers (1)
  1. 19 June, 05:35
    0
    Answers below

    Explanation:

    a) What is the CET1 risk-based ratio?

    Ans: - CET1 risk-based ratio = ($45 + $40) / $1,090 = 0.07798 or 7.798 percent.

    b) What is the Tier 1 Risk-based capital ratio?

    Ans: - Risk-adjusted assets = $20x0.0 + $40x0.0 + $600x0.5 + $430x1.0 = $730.

    Tier I capital ratio = ($45 + $40) / $730 = 0.11644 or 11.644 percent.

    c) What is the total risk-based capital ratio?

    Ans: - The total risk-based capital ratio = ($25 + $45 + $40) / $730 = 0.150685 or 15.07 percent.

    d) What is the leverage ratio?

    Ans: - leverage ratio = ($45 + $40) / $1,090 = 0.07798 or 7.798 percent.

    e) In what capital risk category would National Bank be placed?

    Ans: - The bank would be place in the well-capitalized category.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities: Assets Liabilities Cash $20 Deposits ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers